Dollar Cost Averaging in Canada: The Simple Strategy to Build Wealth
Dollar Cost Averaging: The Simplest Way to Build Wealth
Stop timing the market. Start investing consistently. DCA into XEQT with zero commissions and watch your wealth grow automatically.
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Claim Your $25 BonusWhat is Dollar Cost Averaging?
Dollar cost averaging (DCA) is an investment strategy where you invest a fixed amount of money at regular intervals, regardless of market conditions. Instead of trying to time the market with one big purchase, you spread your investments over time.
Here’s the simple version: Invest the same amount every week or month, no matter what the market is doing.
The DCA Formula
Pick an amount you can afford → Set a schedule (weekly/bi-weekly/monthly) → Buy the same ETF every time → Never stop, never skip, never check prices.
Why Dollar Cost Averaging Works
Removes Emotion from Investing
No more agonizing over whether it's the "right time" to invest. You invest on schedule, period. Market up? You buy. Market down? You buy.
Reduces Average Cost Per Share
When prices drop, your fixed amount buys more shares. When prices rise, you buy fewer. Over time, this can lower your average cost.
Builds Investing Discipline
Automatic investing creates a habit. You pay yourself first, and your wealth grows while you focus on living your life.
Perfect for Regular Income
Most Canadians get paid bi-weekly or monthly. DCA aligns perfectly with your paycheque cycle—invest right when you get paid.
DCA + XEQT: The Perfect Combination
XEQT (iShares Core Equity ETF Portfolio) is ideal for dollar cost averaging because:
- One ETF, global diversification — 9,000+ stocks across the world
- Low cost — 0.20% MER means more money compounds for you
- No rebalancing needed — iShares does it automatically
- Always in the market — 100% equities for maximum long-term growth
Example: DCA $100/Week into XEQT
Week 1: XEQT at $28.50 → Buy 3.51 shares
Week 2: XEQT drops to $27.00 → Buy 3.70 shares
Week 3: XEQT rises to $29.00 → Buy 3.45 shares
Week 4: XEQT at $28.00 → Buy 3.57 shares
Result: You own 14.23 shares at an average cost of $28.11/share
If you had invested $400 in Week 1, you'd only have 14.04 shares. DCA gave you 0.19 extra shares for free.
Start Your DCA Strategy Today
Wealthsimple makes dollar cost averaging effortless. Zero commissions, fractional shares, and automatic deposits.
Get Started + $25 BonusWhy Wealthsimple is Perfect for DCA
| Feature | Why It Matters for DCA |
|---|---|
| Zero commissions | Invest any amount without fees eating your returns |
| Fractional shares | Invest exactly $100, not “however many whole shares fit” |
| Automatic deposits | Set it and forget it—money moves from your bank automatically |
| Automatic investing | Your deposits can auto-buy XEQT without you lifting a finger |
| No minimums | Start with $1 if you want—perfect for testing your DCA amount |
The Wealthsimple Advantage
Most brokers charge $5-10 per trade. If you're DCA investing weekly, that's $260-520/year in fees alone. With Wealthsimple, you pay $0. Every dollar goes into XEQT.
How to Set Up Dollar Cost Averaging on Wealthsimple
5-Minute Setup Guide
- Open your Wealthsimple account — Use this link to get a $25 bonus
- Choose your account type — TFSA for most Canadians (tax-free growth!)
- Set up automatic deposits — Go to Funding → Recurring deposits → Pick your amount and schedule
- Enable automatic investing — Under your deposit settings, turn on "Auto-invest" and select XEQT
- Forget about it — Seriously. Check once a year if you must. Otherwise, let it grow.
DCA vs. Lump Sum Investing
You might wonder: “If I have $10,000 sitting in savings, should I invest it all now or DCA?”
| Strategy | Best When | Pros | Cons |
|---|---|---|---|
| Lump Sum | Markets trend upward long-term | Historically beats DCA ~67% of time | Psychological stress if market drops immediately |
| Dollar Cost Averaging | You're investing from income | Reduces regret, builds habit | May slightly underperform in rising markets |
The honest answer: Lump sum investing has a slight mathematical edge because markets rise more often than they fall. But DCA has a massive psychological edge—you’re more likely to stick with it.
The Best Strategy is the One You'll Actually Follow
If DCA helps you sleep at night and keeps you invested through volatility, it beats a lump sum strategy you abandon during the next crash.
How Much Should You DCA?
The right amount depends on your situation, but here are some guidelines:
| Income Level | Suggested Weekly DCA | Monthly Equivalent |
|---|---|---|
| Student/Entry-level | $25-50 | $100-200 |
| Early career | $50-150 | $200-600 |
| Mid-career | $150-400 | $600-1,600 |
| Established professional | $400+ | $1,600+ |
The key is consistency, not amount. $25/week for 30 years beats $200/week for 3 years.
Ready to Start Building Wealth?
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Common DCA Mistakes to Avoid
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Stopping during market crashes — This is when DCA works best! You’re buying more shares at lower prices.
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Checking your portfolio too often — Set calendar reminders to check quarterly at most.
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Trying to “optimize” your timing — The whole point of DCA is removing timing decisions.
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Starting too small — While any amount helps, make sure you’re contributing enough to matter in 20 years.
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Not increasing contributions over time — As your income grows, increase your DCA amount.
Frequently Asked Questions
How often should I invest with DCA?
Weekly or bi-weekly is ideal—it aligns with most paycheque schedules and provides good averaging. Monthly works too, but more frequent is slightly better for cost averaging.
Should I DCA in a TFSA or RRSP?
For most Canadians, start with a TFSA. Your gains grow tax-free, and withdrawals are flexible. Use an RRSP if your employer matches contributions or you're in a high tax bracket.
What if the market keeps going up—am I missing out?
If markets keep rising, you're still making money on every purchase. Yes, earlier purchases perform better, but you're building wealth consistently either way.
Can I pause my DCA if I need the money?
Absolutely. You can pause automatic deposits anytime on Wealthsimple. But try to build an emergency fund first so your investments can stay invested.
Why XEQT specifically for DCA?
XEQT is a single ETF that holds the entire global stock market. One purchase gives you instant diversification. No need to decide between multiple ETFs or rebalance yourself.
Does DCA work with fractional shares?
Yes! Wealthsimple's fractional shares are perfect for DCA. Your $100 buys exactly $100 worth of XEQT, not "3 shares with $15 left over."
Start Your DCA Journey Today
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